A generous return policy can encourage consumer spending and inspire loyalty. On the other hand, a policy that makes it more costly or inconvenient for customers to return their items could sting a retailer’s bottom line.
Here are some short- and long-term ways return policies can affect retailers, and ways to avoid charging customers a fee to cover return costs.
For your consideration: A large majority (81%) of US digital shoppers review return policies before making a purchase with a merchant for the first time, per an August 2023 Happy Returns report commissioned by PayPal.
Facing the consequences: Nearly half (48%) of US apparel/footwear retailers saw a decrease in average order value since implementing return fees, per Happy Returns.
Managing the costs: Providing free returns can be quite expensive for retailers—total US retail return volume will reach $913.57 billion this year, with most returns (72.7%) coming from non-ecommerce retail, per our forecast.
There are a few ways that retailers can cut down on return costs, including:
Desired outcomes: Retailers can also use return policies to drive certain kinds of behaviors among shoppers.
This was originally featured in the Retail Daily newsletter. For more retail insights, statistics, and trends, subscribe here.
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